There are advertisements everywhere for refinancing or mortgages for purchasing a property. There are lots of different sources of mortgage loans, and it can be important to understand the differences between them to make sure you are getting a good deal. The largest and most familiar source to many borrowers is their commercial bank where they have their checking and savings accounts. Often times in the retail branches of these banks there will be mortgage loan officers available to answer questions or take your application. Although these locations are convenient and the companies household names, they may not offer the best deals. These banks often use their brand name to get loans from first time buyers and unsophisticated shoppers, and they don't necessarily offer them the best rates. A second source of loans are mortgage brokers. They broker out their loans to a variety of lending sources. In theory, they shop your loan around to get you the best possible deal. Many lenders offer "specials" on a weekly or monthly basis that can get you a particularly good deal if you qualify. There are many smaller specialty lenders. These are lenders that focus on a particular niche, such as "subprime" borrowers who have lower credit, or lenders who need to do "no documentation" loans. It is important to know that lenders can be very different in their treatment of different loans. Each lenders has their own set of "underwriting guidelines" which are the uniform rules they apply to all mortgage applicants. These rules help them decide which borrowers to approve and which borrowers to reject. A mortgage loan which is rejected outright by one lender may be totally acceptable to another lender. This is not just between different credit ranges. Although a lender may treat a person with great credit and bad credit differently, two different lenders may treat a person with great credit differently. For example, one lender may allow a borrower with great credit to do a 100% purchase loan for an investment property, while another lender may require a 20% down payment for the exact same loan. The important point to know if that one lender rejecting you should not be the end of your quest for a mortgage or refinance. There are literally thousands of different lenders out there, and they can do all kinds of loans. |
